Welcome to the home for real-time coverage of markets brought to you by Reuters reporters. You can share your thoughts with us at markets.research@thomsonreuters.com

INVESTORS RIDE THE CHINESE DRAGON AMID U.S. TARIFF WOES

The widening chasm between China and the United States is reverberating beyond geopolitics and economics, now echoing through global markets, where investors are increasingly turning to Shanghai markets for solace.

Sandeep Rao, a senior researcher at Leverage Shares, an investment management company with assets of about $1 billion, including in Tesla and other EV makers, points out that Alibaba's recent earnings reveal a significant divergence between its Hong Kong 9988.HK and US-listed shares BABA.N.

A glance at the trading volumes for the week up to Thursday shows that its Hong Kong shares boasted a volume of 879.77 million, while its U.S. counterpart recorded only 121.96 million, according to LSEG data.

Similarly, examining another Chinese tech behemoth, Baidu 9888.HK, BIDU.O, reveals that its Hong Kong listing saw 80 million shares traded, compared to a mere 21 million in the U.S. for the same period.

Adding weight to this shift is the year-to-date performance of each country's benchmark stock index. Hong Kong's Hang Seng .HSI surged by 20.8%, while New York's S&P 500 .SPX dipped 2.4%.

The pivot in investor sentiment from the U.S. to China began roughly a month ago, sparked by Chinese AI startup DeepSeek's launch of a free assistant that employs lower-cost chips and less data. This innovation has shaken investors' confidence in the profitability of AI and its voracious appetite for high-tech chips.

Concerns over U.S. President Donald Trump's tariffs have intensified fears of inflation and an economic slowdown in recent weeks, prompting investors to seek opportunities outside the U.S. Consequently, all three major U.S. indexes slipped into negative territory for 2025.

"If the impact of tariffs on China is to prompt Chinese policy makers to stimulate consumer spending in the domestic economy that could well be rocket fuel for Chinese tech stocks," said Bill Sterling, Global Strategist at GW&K Investment Management.

(Pranav Kashyap, Harshita Mary Varghese)

*****

FOR FRIDAY'S EARLIER LIVE MARKETS POSTS:

COULD'VE BEEN WORSE: A JOBS REPORT DEEP DIVE - CLICK HERE

U.S. STOCKS FIGHT TO STABILIZE, AWAIT POWELL REMARKS - CLICK HERE

U.S. STOCK FUTURES CHURN, YIELDS FALL, AFTER LATEST JOBS DATA - CLICK HERE

EUROPEAN BANK RALLY 'FASTER AND STRONGER' THAN PREDICTED - UBS - CLICK HERE

MAG 7? MORE LIKE 'LAG 7'... - CLICK HERE

EUROPEAN STOCKS FALL ON U.S. TRADE POLICY CONFUSION - CLICK HERE

EUROPE BEFORE THE BELL: FUTURES LOWER AS TRUMP FLIP-FLOPS ON TARIFFS - CLICK HERE

PAYROLLS AND POWELL PROVIDE FOCAL POINT - CLICK HERE